Ryanair signalled an era of lower fares at Stansted after striking a 10-year
deal with the airport’s new owners to grow traffic by 50pc at its main UK
hub to more than 20m passengers a year.

The low-fare carrier and Manchester Airports Group (MAG), which acquired Stansted in February for £1.5bn, have hatched a long-term agreement that will see Ryanair given a financial incentive to increase passenger volumes.

The extra traffic will be rewarded with lower landing charges - and could lead to the creation of 7,000 jobs.

The deal ends a seven-year stand-off between Ryanair, which accounts for 70pc of Stansted’s traffic, and the airport, whose former owner BAA refused to countenance a commercial deal.

The upshot is that the carrier shifted aircraft elsewhere, with its own volumes through the Essex airport dropping from 15m to 13.2m between 2007 and 2012, while Stansted’s total throughput fell from 23.8m to 17.5m.

Michael O’Leary, Ryanair’s chief executive, said the deal “will see us reverse all of the decline over the last seven years due to the mismanagement of the BAA monopoly. It vindicates the decision of the UK authorities to break up BAA”.

He said that from next summer, Ryanair would now increase aircraft at Stansted to 43 from 37, flying 120 routes against the current 116 including four new ones to Bordeaux, Dortmund, Lisbon and Rabat.

“We will cut our prices to deliver growth,” Mr O’Leary said.

This year’s winter flying programme, when Ryanair traditionally cuts Stansted capacity, will not be affected by the new deal, he said.

He added that, based on industry metrics citing the creation of up to 1,000 new jobs for every 1m passengers, “we’ll create up to 7,000 new jobs over five years”.

Neither he nor MAG would detail the discounts on landing fees, though the deal is thought to start at a lower level than the current charges of around £8.50 per passenger to incentivise the airline to grow.

“It’s an incentive-based scheme. As we hit growth targets, our costs will go down by a very modest amount – too modest,” he said.

“It’s indicative of the new regime at Stansted that, within six months of taking over, they are offering us a deal for very aggressive growth.”

Andrew Harrison, Stansted’s managing director, said: “We’ve negotiated very hard. It’s good for Ryanair and it’s good for us.”

To help boost traffic, Stansted is currently investing £80m to improve passenger experiences at the airport, clearing unused check-in desks to make extra space for both seating and quicker security clearance.

Ken O’Toole, MAG’s chief commercial officer, added that Ryanair had also undertaken to help attract long-haul carriers to the airport – a move that has only become possible since the change of ownership.

“We know the long-haul airlines. But they hadn’t seen anyone from Stansted for years because there was no incentive for BAA to meet them,” he said, given its ownership of Heathrow. “In fact they were pretty much prohibited from meeting them.”

The deal comes less than a fortnight after Ryanair shocked the market with a profits warning, when the airline said full-year earnings could be at the bottom of its guidance or even below it.

“I think people have over-reacted a little bit,” said Mr O’Leary. “It does help to focus analysts’ minds on our profits guidance of €570m to €600m (£477m to £503m). Some analysts were on €640m.”

The deal with Ryanair follows Stansted’s agreement in June with easyJet, which involves the airport’s second biggest carrier expanding its traffic from 2.8m passengers to 6m over the next five years.

Mr O’Toole added that Stansted, which does not face the capacity contraints of Heathrow and Gatwick, “would be the fastest growing airport in London”.